Court of Appeal (Cal.) Finds that Consumer Lacked Standing to Sue Car Dealer Who Violated Procedures of Certified Used Vehicle Statute in the Absence of Actual Injury

In Brooks v. Carmax Auto Superstores California, LLC, 2016 WL 1293757, at *4-5 (Cal.App. 4 Dist., 2016) (unpublished), the Court of Appeal affirmed the trial court’s judgment against a consumer on the basis that the consumer lacked standing to sue under the CLRA or UCL for mere technical violations of the used vehicle statute.  The facts were as follows:

CarMax performs a Certified Quality Inspection (CQI) on every vehicle it sells to consumers, and performed that inspection on the Jeep. CarMax expended at least 15.7 man hours and over $1,000 in conducting the CQI for the Jeep, not including the additional time spent on repairs it sublet to other shops. When CarMax technicians conduct a CQI, the technicians use a document (the CQI/VQI checklist) that lists components and observations concerning the vehicle, and information from the CQI/VQI checklist is entered into CarMax vehicle repair order history database, but the physical CQI/VQI checklist is not retained by CarMax. Upon completion of the CQI, a signed CQI Certificate is placed into the glove box of the inspected vehicle. The signed CQI Certificate for the Jeep, which listed the Jeep’s stock number, was placed in its glove box at the time the inspection was completed and remained in the glove box until after Brooks purchased the Jeep.  Brooks drove the Jeep for over 3000 miles without any problems. However, on February 11, 2012, she drove it through a 6” to 12” deep puddle and the engine seized. She used a third party repair shop to replace the engine, but the Jeep thereafter had occasional problems with the starter and with warning light activations.  Brooks demanded (among other things) that CarMax rescind the purchase agreement and buy the Jeep back. When it rejected her demands, she filed this action alleging CarMax violated section 11713.18 in connection with her purchase of the Jeep, because neither the content of the CQI Certificate nor its method of delivery to her complied with CarMax’s obligations under section 11713.18.

The Court of Appeal found that the consumer received what she bargained for — a properly functioning jeep — and that the technical violations of the statute did not confer standing on the consumer to sue under the UCL or the CLRA.

Ordinarily, “under the CLRA, relief is limited to consumers who have suffered, in fact, damage as a result of an illegal practice.” (Davis–Miller v. Automobile Club of Southern California (2011) 201 Cal.App.4th 106, 122.) Similarly, although the UCL did not predicate standing on a showing of injury or damage prior to the 2004 enactment of Proposition 64, that lacuna rendered the UCL “subject to abuse by attorneys who used it as the basis for legal ‘ “shakedown” ‘ schemes” (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 812, disapproved on other grounds in Kwikset, supra, 51 Cal.4th at p. 337) and frivolous lawsuits (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 228). “To address this problem, Proposition 64 amended [the UCL] to accord standing only to certain specified public officials and to any person who ‘ “ ‘has suffered injury in fact and has lost money or property as a result of such unfair competition.’ “ ‘ “ (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1590, quoting Buckland, at p. 812.) “Thus, in the aftermath of Proposition 64, only plaintiffs who have suffered actual damage may pursue a private UCL action.” (Ibid.)  Brooks argues that section 11713.18, subdivision (b), by providing that a violation of section 11713.18 “is actionable under [the CLRA or the UCL],” was intended to exempt her from showing the “actual injury” predicate ordinarily necessary to making a claim “actionable” under the CLRA and the UCL. She cites no pertinent authority for this reading of section 11713.18, subdivision (b), and instead relies solely on Rojas v. Platinum Auto Group, Inc. (2013) 212 Cal.App.4th 997 (Rojas ). Although Rojas did conclude a specific remedy provided under the so-called Rees–Levering Act (Civ.Code, § 2981 et seq.) could be invoked even if the plaintiff suffered no actual harm (Rojas, at p. 1005), it did not hold the CLRA and UCL claims asserted by the plaintiff in that action (id. at p. 1006) could also be pursued without actual injury.⁴ Moreover, Rojas’s conclusion rested on two important factors not present here. First, Rojas examined a statutory scheme that included an express additional statutory remedy for its violation, and no similar additional remedy is expressly appended to section 11713.18. (Cf. County of San Diego v. San Diego NORML (2008) 165 Cal.App.4th 798, 825[“Where statutes involving similar issues contain language demonstrating the Legislature knows how to express its intent, ‘ “the omission of such provision from a similar statute concerning a related subject is significant to show that a different legislative intent existed with reference to the different statutes.” ‘ ”) Moreover, Rojas’s conclusion as to the intent of the express statutory remedy was confirmed by the clear legislative history declaring the Legislature intended the remedy provided by the Rees–Levering Act to be available “ ‘regardless of the nature of the disclosure violation or any consumer harm ’ “ (Rojas, supra, 212 Cal.App.4th at p. 1005), and no similar language can be found in the legislative history accompanying section 11713.18.   There is no basis for concluding section 11713.18, subdivision (b), by providing that a violation of section 11713.18 is “actionable” under the CLRA or the UCL, was intended to dispense with the “actual injury” predicate ordinarily necessary before a claim for a violation of that section can be “actionable” by a private party under the CLRA and the UCL.